College is not just a transition in terms of your academics and social life. It is also a significant shift in your level of independence. For many students, college represents the first time that you’re living away from home, and even if your parents continue to cover some of your expenses for you, you likely will have a lot more oversight over daily expenditures and your own budget.

 

For this reason, high school is the ideal time to lay the groundwork for your new financial freedom. By developing practical budgeting and spending habits, thinking about your future, and understanding the basics of personal finances, you’ll set yourself up well for financial independence when you do make the move to college. In this post, we outline our five top financial tips for high school students.

 

1. Understand the Basics of Opening and Managing a Bank Account

There are several different types of bank accounts that you can open, and you should choose the kind that is best suited to your needs. Start by visiting a local bank to get an idea of the options available to you.

 

The first thing you should know about opening a bank account is that it isn’t always free. Some banks charge a routine monthly maintenance fee. Others charge this fee only if you don’t maintain a certain minimum balance throughout the month. Many banks also charge you to withdraw money from ATMs that they don’t maintain. In addition, you can always expect fees if you draw more money out of your account than you have in it, which is referred to as an overdraft fee. These charges can really add up if you don’t pay attention to them.

 

That said, there are some ways around these fees. Some banks, such as Bank of America, Wells Fargo, and SunTrust, have student accounts with lower monthly fees that are geared specifically towards opening your first bank account. You might also want to consider online banks, where maintenance fees are typically lower. Sometimes you can even find accounts that don’t charge you for using non-affiliated ATMs.  

 

Another on-campus option is sometimes a credit union. These are essentially non-profit organizations that allow you to open savings and checking accounts and take out loans. Unlike banks, they are not always federally insured, so you’ll need to do some homework before you open an account. You always want to keep your money someplace with federal backing to ensure that you won’t be left out in the cold should the institution go bankrupt.

 

There are two primary types of accounts you might be interested in opening. You can choose one or the other, or you can even open both and have them linked electronically to make transfer simple and easy.

 

Checking accounts are one option, and they are generally used for money that you intend to keep in the bank for only a short period of time. In other words, these types of accounts are best suited for money that you are spending now or in the near future. You can withdraw funds from a checking account at the ATM, use a debit card to charge against your balance, or write checks to be withdrawn from them. Typically, there is a monthly fee for most checking accounts. This can sometimes be avoided through certain student accounts or by meeting a monthly minimum balance.

 

Savings accounts are another option that you might consider. These are generally for holding money for longer periods of time and usually accrue a small amount of interest by doing so. In general, you have a limited number of times that you can withdraw from your savings account in a certain time frame, and there are some types of savings accounts that don’t allow you to withdraw at all, except for specific purposes like education or retirement. Sometimes you can shop around to find savings accounts that accrue interest at higher rates.   

 

Knowing your account options and choosing an account that is well suited to your needs is a practical approach. Shop around for the best rates and minimal fees to ensure that you’re getting the best deal possible.

 

2. Start Saving for College

Everyone should begin college with some money in the bank. Even if your parents are paying for you to go to college or you’re confident that you’ll get a significant scholarship or financial aid package, you will still need some college savings to get you started. There are many expenses associated with college that aren’t covered by tuition or housing costs. These could include food outside of your regular dining plan, dorm amenities like a fan to keep cool or extension cords for your electronic devices, or more significant costs like books or airfare for travel.

 

Well before you start college, have a conversation with your parents to outline the expectations of what expenses they’ll be covering. This will give you an idea of how much money you’re going to need to get started.

 

Think about getting a job over the summer to put some money away. Also, decide whether you’ll get a job during college. This can be a smart way to ensure a steady income, but it needs to be balanced delicately with your coursework and other commitments. Try to talk to current or former students at the college you’ll be attending to see if you can handle a job with the workload. Sometimes it’s best to test the waters with your course load before adding a job on top of that. Having some money in the bank when you arrive will ensure that you have the time to do so.

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3. Think About Getting a Credit Card When You Go To College

The decision to get a credit card shouldn’t be taken lightly. Unlike debit cards, which will decline transactions once you’ve overdrawn your account, a credit card will allow you to spend up to a certain line of credit, regardless of how much money you actually have in your bank account. If you overspend, you’ll often find yourself buried in interest and fees that are difficult to pay back. In addition, your initial use of a credit card will have a large impact on your credit score that could follow you for years to come.

 

Because it can be difficult to get approved for your first credit card without any credit history, some credit companies have cards specifically designed for college students. Discover It and Citi Thank You are just a few of the options out there.

 

4. Create a Budget and Manage Expenditures

One foolproof way to prevent overspending and keep your finances under control is by creating and managing a budget. While this might seem like an overwhelming task at first, it is one that you can get started on fairly simply.

 

To begin, track your spending habits over the course of a month. Keep a record of every penny that you spend. Also think about recurring fees or monthly bills, like your cell phone or car insurance. You should try to put a little bit of money into savings each month too. Make a list of everywhere you’re spending money.

 

Once you have a complete picture of how much money you’re spending and where it’s going, evaluate how much you’re spending versus how much income you have. Are there areas where you could cut costs? Are your spending habits unsustainable? How do you expect them to change when you get to college?

 

Also, consider one of the many money management apps or websites available. Many, including Mint and You Need a Budget are free to use and can be tied into your existing bank accounts and credit cards to help automatically track and categorize your spending. You can even set them to send alerts when you’re nearing your monthly maximum in a certain category.

 

5. Know The Available Resources to Help With Financial Management

Just because you’re headed off to college doesn’t mean that you’re about to become a completely independent adult, and even if it did, not even adults are above asking for help. There’s no reason to tackle your personal finances and budgeting by yourself. Ask for help from trusted friends, mentors, or your parents. Never feel overwhelmed by something that others can help you to manage.

 

There are plenty of outside resources available too, like books and Internet tools. Khan Academy and 360 Degrees of Financial Literacy are two smart places to start your online search. If you prefer books, consider The Money Savvy Student and Financial Basics: A Money Management Guide for Students to get you off in the right direction.

 

Getting on the right financial track as an adult can be tricky if you have bad habits to break or poor credit to overcome. Lay the foundation for responsible financial management while you’re still in high school, and you’re bound to form positive habits that last a lifetime.

 

To learn more about saving for college or other financial concerns, consider the benefits of the CollegeVine Near Peer Mentorship Program, which provides access to practical advice on topics from college admissions to career aspirations, all from successful college students.

 

For more information about finances, investments, or college savings, also check out these CollegeVine posts:

 

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Kate Sundquist

Kate Sundquist

Senior Blogger at CollegeVine
Kate Koch-Sundquist is a graduate of Pomona College where she studied sociology, psychology, and writing before going on to receive an M.Ed. from Lesley University. After a few forays into living abroad and afloat (sometimes at the same time), she now makes her home north of Boston where she works as a content writer and, with her husband, raises two young sons who both inspire her and challenge her on a daily basis.
Kate Sundquist